UAE Corporate Tax 2025 – Complete Guide for Businesses

The UAE has entered a new era of taxation. With the introduction of Corporate Tax (CT) in June 2023, the country moved from being a tax-free haven to a jurisdiction with one of the most competitive corporate tax regimes worldwide.

For many companies, 2025 will be the first full financial year under corporate tax rules, making it critical to understand how CT affects your business. Whether you’re operating in Dubai, Abu Dhabi, Sharjah, or one of the UAE’s free zones, compliance with the Federal Tax Authority (FTA) is no longer optional — it’s a legal requirement.

n this guide, we’ll explain everything you need to know about UAE corporate tax in 2025, including tax rates, exemptions, deadlines, deductions, small business relief, penalties, and practical planning tips.

What is UAE Corporate Tax?

Corporate Tax is a federal tax on the profits of businesses operating in the UAE. Unlike VAT, which applies to the sale of goods and services, corporate tax is calculated on a company’s net profit, as reported in audited financial statements, with adjustments for tax rules.

• Introduced: Federal Decree-Law No. 47 of 2022
• Effective Date: 1 June 2023
• Applies to: Mainland companies, certain free zone companies, and foreign entities with a UAE presence

The UAE’s tax system remains one of the most attractive in the world — offering a 0% rate on the first AED 375,000 of profit and only 9% thereafter, making it highly competitive compared to other jurisdiction

UAE Corporate Tax Rate in 2025

The corporate tax rate is simple and designed to support SMEs while still aligning with global tax standards.

• 0% on the first AED 375,000 of taxable income
• 9% on profits above AED 375,000
• 15% minimum tax for multinational groups subject to OECD Pillar Two (with consolidated revenue ≥ EUR 750 million)

This progressive structure ensures that smaller businesses are shielded while larger companies contribute at competitive international levels.

Who is Subject to UAE Corporate Tax?

Mainland Companies

All companies incorporated in the UAE mainland (LLCs, PSCs, sole establishments, etc.) are required to register for corporate tax and file annual returns.

Free Zone Companies

Free zones remain attractive, but the 0% corporate tax incentive applies only to Qualifying Free Zone Persons (QFZPs).

To maintain QFZP status, a company must:

• Have adequate economic substance in the UAE
• Earn Qualifying Income (as defined by CT rules)
• Not elect to be taxed under the standard 9% regime

Non-qualifying or mainland-sourced income may be subject to the 9% corporate tax rate

Foreign Companies

Foreign businesses with a Permanent Establishment (PE) in the UAE, or branches of foreign companies, are subject to UAE CT on income attributable to their UAE operations.

Exempt Entities

Not all organizations fall under corporate tax. The following entities are exempt:

• UAE government entities and government-controlled entities
• Extractive businesses (oil, natural gas, and natural resources)
• Charities and public benefit organizations (approved by Cabinet)
• Investment funds (approved by the FTA)

Corporate Tax Deadlines in 2025

The filing deadline depends on your company’s financial year.

• Companies with Jan–Dec financial year: First return for FY 2024 is due 30 September 2025
• Companies with Jul 2024–Dec 2025 year-end: First return is due 30 September 2026

Every business must:

• Register with the FTA for CT (if not already done)
• File CT return within 9 months of year-end
• Pay CT liability by the same deadline

Example: If your financial year ends 31 December 2024, your first CT return and payment are due by 30 September 2025.

Deductible vs. Non-Deductible Expenses

To calculate taxable income, businesses can claim deductions for genuine business expenses, provided they are wholly and exclusively incurred for business purposes.

Deductible expenses include:

• Salaries and staff costs
• Rent, utilities, and office expenses
• Depreciation of fixed assets
• Professional service fees (audit, legal, accounting)
• Bad debts (if proven irrecoverable)

Non-deductible expenses include:

• Personal or private expenses
• Fines and penalties (except compensation payments)
• Bribes or illegal payments
• Dividend distributions

Small Business Relief in 2025

To support SMEs, the UAE introduced Small Business Relief (SBR).

Eligibility criteria:

• Annual revenue ≤ AED 3 million
• Relief applies until 31 December 2026

Benefits:

• Business is treated as if it has no taxable income
• Simplified filing and compliance

 Important Note: If your revenue later exceeds AED 3m, corporate tax applies retroactively, so monitoring turnover is crucial.

Compliance Obligations for Businesses

To remain compliant in 2025, companies must ensure:

1. Corporate Tax Registration – via the FTA portal
2. Proper Accounting Records – maintained under IFRS
3. Annual Filing – submit CT return electronically within 9 months of year-end
4. Audited Financial Statements – required by most free zones and often requested by banks
5. Transfer Pricing Documentation – if related-party transactions exist

Penalties for Non-Compliance

The FTA has introduced significant penalties to enforce compliance.

• Failure to register: AED 10,000
• Late filing: AED 500 to AED 5,000 depending on delay
• Late payment: 14% annual interest on unpaid tax
• Incorrect return: Up to 200% of understated tax

These penalties can be avoided through timely registration, accurate bookkeeping, and professional tax advice.

Corporate Tax vs VAT – Key Differences

While both are federal taxes, they apply differently:

• VAT (Value Added Tax): 5% on goods and services at the transaction level
• Corporate Tax: 9% on net business profits

Businesses must comply with both taxes, and poor VAT compliance can indirectly affect CT reporting (since accurate books are essential for both).

Practical Tax Planning Tips for 2025

1. Align accounting policies with CT rules (e.g., accruals, depreciation).
2. Maximize allowable deductions — keep proper invoices for every expense.
3. Plan group structures — consider tax grouping or intra-group relief if applicable.
4. Document related-party transactions to comply with transfer pricing.
5. Prepare early for audits — don’t wait until deadlines.
6. Work with professional advisors to optimize your tax position and reduce risks.

Case Study: SME in Dubai

Scenario: A Dubai LLC has AED 2.5 million in revenue and AED 400,000 in net profit.

• First AED 375,000 profit → 0% tax = AED 0
• Remaining AED 25,000 → 9% tax = AED 2,250

Result: The company pays only AED 2,250 in corporate tax, showing how favourable the UAE regime is for SMEs.

Conclusion

The UAE corporate tax regime is simple, competitive, and aligned with global standards. However, 2025 is a crucial year for compliance, and businesses must act proactively to avoid penalties.

Whether you’re an SME or a large corporation, ensuring accurate registration, proper record-keeping, and timely filing will protect your business and optimise your tax position.

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At Advanced AnalytIQ, we specialise in:

• Corporate Tax compliance & planning
• VAT advisory & filing
• Audit & assurance services
• Outsourced accounting solutions

Contact us today for a free consultation and let us help your business stay fully compliant with UAE tax regulations.